Sandro, Maje Parent Company SMCP Q4 Results Impacted by China Recovery – WWD

PARIS – SMCP continued its recovery in the fourth quarter with a four percent bump in sales, a solid showing despite both price increases and fewer discounts.

The parent company of Sandro, Maje, Claudie Pierlot and Fursac reported full-year sales of 1.2 billion euros, up 13 percent on an organic basis, though a slow recovery in China dragged down the numbers. Excluding China, where sales were significantly impacted by the pandemic closure policies that were in place until December, organic growth year-over-year was 23 percent.

“The group registers another very good performance this year, with sales growth in all regions except for Continental China due to COVID-related constraints. The work we have been doing for several years on the desirability of our brands has enabled us to adjust our sales prices in line with inflation, while continuing to deploy our full-price strategy,” said chief executive officer Isabelle Guichot.

The strong performance comes as bondholders AlixParnters and GLAS announced they are seeking to offload their combined 37 percent share in the company, initiating the sale process March 1 just ahead of the pre-scheduled board meeting to approve the financial results. This positions the company ripe for takeover.

“The company welcomes this first step, which could allow SMCP to regain a stable shareholding structure on which it could rely to pursue its development strategy,” the company said.

Under French law, the 37 percent sale could trigger a mandatory takeover. The board appointed a special committee to oversee the developments, and enlisted investment bank Rothschild & Co. to advise in the process.

AlixParnters has enlisted investment bank Lazard on its end.

Sandro remains the company’s brand leader, accounting for over half of the company’s sales. In the fourth quarter, Sandro’s organic sales grew 4.2 percent to 165 million euros, and up 13.3 percent for the full year to 582 million euros.

Maje reported a bump of 3.1 percent in the fourth quarter, to 124 million euros in sales, and a jump of 11.4 percent to 467 million euros in sales year-over-year.

Claudie Pierlot and men’s label Fursac, which SMCP acquired in 2019, together increased 5 percent to 43 million euros in sales in the fourth quarter, showing an increase of 17.9 percent year-over-year to 156 million euros.

A slow recovery in China proved to be a drag on the region, with sales down 20 percent year-over-year in Asia, credited to the rolling closures there which impacted stores and warehouses serving online sales channels.

The company noted that even after restrictions were lifted, stores were still impacted as employees fell ill. That resulted in more store closures, with 30 percent of stores shuttered during the month of December.

Europe excluding France was the strongest region for the company, with an organic increase of 31 percent year-over-year, driven by sales in the U.K., Spain, Germany and Italy. SMCP noted that physical stores held strong, but that online sales channels were boosted 12 percent.

Its home country of France, sales were up 23 percent year-over-year thanks to the strength of physical stores and the return of tourists, specifically to the Paris region.

SMCP has done significant work on its full-price sales, with a 5.5 percent drop in the discount rate in France year-over-year, and down 3 percent in Europe in 2022.

The company opened 13 new locations in the fourth quarter, with nine in in China, in anticipation of a strong recovery there.

In the Americas, sales were up 16 percent year-over-year, while online was a big driver of sales, up 21 percent, beating pre-pandemic levels. The discount rate was down 5 percent year-over-year and a strong 17 points since 2021.

Adjusted EBITDA was up 21 million euros to 267 million euros in 2022, credited to the company’s full price strategy, despite prices increasing to keep up with the inflation rate in all regions.

The company opened 13 net stores in the fourth quarter, and is looking to build on the strength of its physical stores with additional openings and expansions of its current stores throughout 2023.